The USD gains, oil prices ease, equity markets are mixed, and US yields rise as risk sentiment wanes. The U.S. dollar extended gains toward 18-month highs as renewed European fiscal and political concerns hurt risk appetite. The euro was the weakest major performer, pressured by France’s debt worries, wider bond spreads and fresh political uncertainty in Spain. Global equity markets were mixed, with European shares under pressure as political upheaval in France and fresh uncertainty in Spain revived concerns over the region’s public finances. U.S. futures were little changed, while Asian markets were firmer after Friday’s Wall Street gains. Elsewhere, oil prices eased, but markets remained wary of potential Middle East supply disruptions, while gold and bitcoin firmed amid renewed demand for alternative assets. Today's focus will be on the US S&P Global Composite PMI & the ISM Services PMI to guide currency markets intraday.
News Headlines. Spanish prime minister Pedro Sanchez calls a snap election. Flávio Bolsonaro takes commanding lead in Brazil election. Estonia shifts troops closer to Russia in 'active defence' push. EU to limit Ukraine's access to farming subsidies if it joins bloc. Saudi Aramco chief warns world's oil stockpiles are 'scarily thin'. Euro slides to 17-month low against dollar. China closes record number of banks as economic strains hit smaller lenders. Russia ramps up attacks on Kyiv as US makes fresh push for peace talks. Canada: Cenovus to buy Athabasca oil for C$12 per share. German spy chief sees 'new, more dangerous' threat from Russia.
In currency markets. Against the USD, CZK weakened as broader European fiscal and political concerns weighed on regional currencies alongside the euro, while DKK softened largely in sympathy with euro weakness given Denmark’s tightly managed exchange-rate link to the single currency. NZD also underperformed, pressured by broad U.S. dollar strength, elevated imported energy costs and concerns that higher costs could further squeeze an already fragile domestic economy.
In commodity markets. WTI -0.29% | Nat Gas -0.03% | Gold +0.58% | Silver +2.65% | Copper +0.61% | Palladium -0.06% | Coffee +2.77% | Cocoa -0.55% | Soybeans +0.86% | Wheat +1.79%
CAD continues under pressure but has recovered modestly from its weakest overnight levels, with widening Canada-U.S. rate differentials and softer oil prices still weighing on the loonie. Recent domestic data have pointed to only modest underlying momentum, leaving markets sensitive to any signs that growth or labour conditions are weakening further. Attention now turns to Tuesday’s Ivey PMI for a read on domestic business activity, followed by Friday’s Canadian employment report, where jobs growth and the unemployment rate will be key for expectations around the Bank of Canada’s next move.
EURCAD eased as the euro remained the weaker side of the cross, with ongoing concerns around Eurozone fiscal stability and growth weighing on sentiment. CAD is also soft, but the relative underperformance of the euro has kept the pair biased lower, with EURCAD approaching monthly lows near 1.5950.
EUR remains under pressure near 17-month lows, with mixed Eurozone services data and weaker investor confidence failing to offset concerns over France’s fiscal outlook and broader regional growth risks. Services activity improved in Germany and Spain but softened in France and Italy, while Sentix investor confidence fell in October. This week’s focus turns to Tuesday’s Eurozone retail sales and Thursday’s ECB monetary policy meeting, which will provide further clues on the growth and rate outlook.
GBPEUR strengthened sharply as sterling benefited from expectations for tighter BoE policy, while the euro remained under pressure from France’s fiscal concerns and fresh political uncertainty in Spain. Recent comments from Bailey and Ramsden have reinforced the case for higher UK rates if inflation pressures persist, helping the pound outperform as investors continue to favour GBP over the single currency.
GBP held broadly steady against the U.S. dollar, with little major UK economic data due this week and markets instead focused on central-bank guidance. BoE speakers including Mann, Lombardelli and Greene will be watched for any shift in the Bank’s increasingly hawkish tone, while Wednesday’s release of the September FOMC minutes should provide more detail on how strongly Fed officials favour additional tightening. With last week’s softer U.S. payrolls having reduced expectations for an October Fed hike, GBP direction this week is likely to depend largely on whether central-bank commentary reinforces or challenges that repricing.
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